Monday, February 26, 2024

Bleak weather for realtors

Looking Back
Bleak weather for realtors
Muzzamel Haque booked an apartment two and a half years ago, with hopes of taking delivery in May 2012. It would end his stay for two decades in a rented home with his family.
His aspirations now hang in the balance.
The stockmarket debacle that began in January this year has wiped out his investments and ability to regularly pay the instalments on a 1,705 square feet apartment in Dhanmondi.
Haque, a banker, is one of the many stock investors who are facing difficulties in paying the instalments on booked apartments at a time when the housing market passes a sluggish period.
Sales of newly built apartments, one of the main drivers of the housing market, slowed down in 2011 compared to the previous year amid uncertainties over fresh electricity and gas connections.
Realtors said the stalemate in utility connections along with a mandatory rule of installing solar panels in the new buildings is taking a toll on the sector, delaying the process of handing over thousands of apartments to buyers.
Around 16,000 ready flats are yet to be handed over to buyers due to the lack of electricity and gas connections, said Murad Iqbal Chowdhury, general secretary of Real Estate and Housing Association of Bangladesh (REHAB), at the inauguration of an annual housing expo — REHAB Fair — on December 15.
In addition, increases to the tax at source for developers, a liquidity shortage in banks and the ongoing stockmarket crisis also affected demand for new homes this year, said realtors.
“It was a very bad year for the overall real estate sector,” said Dr Toufiq M Seraj, managing director of Sheltech (Pvt) Ltd, which is yet to hand over 200 flats due to pending utility connections.
The sector handed over around 8,000 apartments a year to buyers since 2006, said Seraj.
But this year, the delivery of flats fell by 30 percent in terms of volume, he said.
The REHAB general secretary told The Daily Star last month that his firm — Mega Builders — sold 10-12 flats a month until the month of Ramadan.
“But I sold only two flats after Ramadan,” Chowdhury added.
“We have a lot of apartments to sell. But in reality those may remain unsold,” he said, blaming the government’s condition that mandates installing solar panels, restrictions on using air conditioners and lethargy in providing fresh electricity and gas connections.
To withstand the lull in business, many developers and builders have started offering price cuts to lure buyers and taking a go slow approach in their hunt for new lands.
But the prospect of a rebound in the housing market next year looks bleak in the face of a gloomy economic outlook, pressures from a volatile stockmarket, along with high inflation, and a slowdown in growth of exports and remittance earnings.
“The situation in the real estate sector will worsen in 2012. A deterioration of the political environment will also hurt the sector,” said Seraj, also a former REHAB president.
To withstand fallouts, Sheltech is avoiding projects on small sized lands, building 1,000-1,200 square feet flats to achieve economies of scale, finishing ongoing projects without delay, and importing elevators and generators directly to save costs.
“We want to keep our sales moving. So we are bracing ourselves for that,” he said.
The housing sector, which provides jobs to more than 20 lakh people, feels the pinch of a slowdown in businesses. Many new builders and developers have entered the scene in the past three to four years, encouraged by the rise in sales of new homes.
A rise in remittance and export earning and a growing stockmarket in the years until 2010 spurred demand for new homes, resulting in property and flat price hikes in the capital.
Realtors said the fall in sales in the outgoing year may put brakes on the skyrocketing prices of property and flats.
“For a majority of people, the price of property is too high to afford,” said Mohammad Farhaduzzaman, manager of Eastern Housing Ltd, one of the oldest realtors, citing a huge turnout of visitors at the REHAB show that ends on December 19.
Buyers lost hope when they came to know the prices of flats, he said. The price of a flat is no less than Tk 6,000 a square feet in major residential areas in Dhaka such as Dhanmondi.
The high price of property has also affected the sale of flats, said Farhaduzzaman.
Seraj of Sheltech said the hike in property prices does not match the growth of the economy, supply and demand for new homes.
“It can’t be said that property prices will go down. But it is quite certain that prices will not go up quickly,” he said.
“From a long term perspective, it will bring good results, as what was happening in the property market was not a financially viable proposition.”

-With The Daily Star input

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